If you browsed around on investor type sites, you might have learned that experienced investors and seasoned Southern Oregon Real Estate experts speak about appreciation as the proverbial “icing on the cake” — it’s generally not even considered the purchasing of investment property.
While it’s still seen as a brilliant idea to look at cash flow first as an owner-occupier of a said estate, putting in the extra time to find investment properties offer one a good chance at appreciation and will reward you handsomely in the long run.
As an experienced house hunter, appreciation may deliver a more powerful financial impact for you than it can for a traditional investor, due to a special tax-law that seem only to benefit owner-occupiers:
Say you live in the property for two years or longer, once you sell the property, much of the capital gains would be tax-free.
This tax break is powerful indeed for some looking to benefit from various small multifamily properties as they would have the chance to take advantage of appreciation as it relates to both income properties as well as smaller residential properties:
This is the case as multi-family properties boost the income of the property and force appreciation.
Hybrid properties, such as duplexes and also fourplexes may benefit from appreciation caused by an improving local Medford Oregon market.
One need to carefully select properties that you feel offers the opportunity to get access to following types of appreciation:
- Forced Income Appreciation: This is when you choose a property that requires a reasonable amount of cosmetic work and offers multiple opportunities for improvement. As you move in, you may have to overhaul the entire plumbing system, add appliances such as your washer or dryer units and refrigerators, and even have to carry out a substantial amount of cosmetic work, in a DIY style. Such improvements will most likely reduce the operating expenses of your property over the long haul and provide you with the added advantage of attracting and retaining tenants, and hopefully improve the property’s long-term income potential.
- Market Appreciation: One of the key advantages to purchasing properties in the Southern Oregon area is that generally speaking, other people want to live there, too. This presents a decent opportunity for appreciation in itself if you happen to have personal reasons for wanting to reside in a given area that applies to large demographics. However, one shouldn’t stop there, as you search for properties within these neighborhoods, you may come across government-sponsored infrastructure projects.
Another thing, requiring your consideration is whether you will be close to various low-cost transportation options to the surrounding neighborhood. Often one hopes that sponsored infrastructure projects, coupled with the overall tremendous growth of the Southern Oregon local economy, will allow one to benefit from market appreciation. However, if you made it your resolve to purchase the property already, then this would be out of your control.
You can hope that you will be able to take advantage of both types of appreciation to create substantial value from this property over the next few years. Wouldn’t it be nice to cash out on that increase in equity, tax-free, then make a plan to reinvest it in a more substantial income-producing real estate asset? Let Southern Oregon Realtors help you out in this regard.
If it is your first investment property, there is always the possibility that you may make a huge mistake somewhere along the line. It might be the case where you are way off in your estimation of expenses, long-term rents, the desirability of the Southern Oregon neighborhood, or you may find you’re getting ripped off on the purchase in general. We can trust and believe that none of those things will come true. What you can be sure off is that your Real Estate experts will give due diligence at each stage of your investment — but only time will tell if you correctly analyzed each critical input.
Maybe you’re slower than other investors, and perhaps you suffered from a great deal of “analysis paralysis.” After much consideration, you get to the point where you decide to pull the trigger and finally make a serious offer on your first investment property. With the kind assistance of seasoned Southern Oregon Realtors, you would have researched the market and defined what you were looking for six months before the actual purchase. Then, it took you a year if not longer to save up for the down payment.
That said, Southern Oregon Real Estate professionals firmly believe that your first investment is by far my most important. A wrong choice could cripple you financially, discourage you from reinvesting, or at the very least, significantly slow you down in accumulating the funds to make a second investment. But, in spite of all the potential adverse outcomes, you will discover it is the right decision after all.